From Direct Democracy to the Direct Economy

Bruno Giussani recently summarized the important ideas of Xavier Comtesse on the Direct Economy.

He writes:
Could “direct democracy” provide a proper metaphor to describe the current economic transformation? Are we heading towards a “direct economy”? In a system of direct democracy, sovereignty is lodged with the citizens – or at least, with those among them that choose to actively participate in the system. They can not only pick among prepackaged options (vote) or candidates (election) but they also can deeply co-shape the policy process. Switzerland is probably the strongest case: here new laws can be put forth, and even the Constitution modified, by citizens’ initiative. Translate that into business terms and we have a description of a system where consumers have a direct influence on what companies develop and produce for them. The more informed, opinionated and wired (socially connected) they are, the more they are likely to make use of this influence and to try to organize it – exactly as in a direct democracy system. On this premise Xavier Comtesse, who heads the Geneva branch of think-tank Avenir Suisse, is writing a book on the idea of “direct economy”. “We’re exiting an economic system based on the producer’s know-how and heading towards one centered on the customer’s know-how

In additional commentary on the process of knowledge transfer from firms to customers, he writes:

in order to interact and participate and co-create, people need to develop or acquire specific know-how. Assembling a bookshelf may require a relatively limited know-how (although for some people it may be overwhelming), but booking a flight ticket online or creating a blog are tasks of a higher complexity, and customizing a laptop is more complex still. Some of this knowledge is purely practical, other is highly conceptual, but in order to benefit from these products or services the customers have to acquire it. How do people acquire this know-how? Mostly by what Xavier calls “transfer”, which can be implicit or explicit. Implicit: “When Dell offers me a way to customize a laptop, they also encourage – or force – me to acquire new knowledge: in a way they operate a transfer of know-how to me”, he writes in the draft of his book. Explicit: online forums and websites, eBay’s University, Swissquote’s ‘trading seminars’, communities or practice, etc. Secondly, Xavier points out that often many of these developments (most notably in the airline business, but also elsewhere) are labeled as “low cost”, but that’s the wrong label, he contends, and the wrong way to look at it: they should be called “high productivity” – because that’s the impact of the active role of the customers: productivity gains. Lower prices in the production process are the result, but the systemic change, he says, is mostly about raising productivity by involving the customers.”

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